High Fidelity, the VR platform from Second Life creator Philip Rosedale, announced that the company has laid off 25 percent of its staff in a new shift that will put a much heavier emphasis on enterprise usecases.

Rosedale announced the news in a blog post, stating that 20 employees were affected in the layoff. However, the new direction for the company won’t mean the end of High Fidelity for general consumers.

Last month, Rosedale revealed in a community meeting that the studio would be shifting its focus from active VR development in effort to improve its desktop client. Additionally, the company pulled support for its first-party communal areas, leaving virtual spaces up to its userbase to create, moderate, and maintain. Much like Second LifeHigh Fidelity is a distributed platform that relies upon individual users’ local severs as well as rented cloud services for its spaces, so the decision undoubtedly comes as a cost-savings maneuver, as well as a way to ready the platform for a larger potential install base.

The company’s intentions to focus on enterprise usecases doesn’t mean they’re shutting down the platform to consumers however. Rosedale says High Fidelity will still be available for free for general use, and that both creator ‘office hours’ and monthly developer meetings are still in effect, which will allow for continued progress on open-source projects.

Speaking to Road to VR, Rosedale attributes the move to a number of factors, one of the most important being overall headset sales.

“First of all, there’s the matter of getting the right audience,” Rosedale tells me. “In Second Life, we had 100 million people that could use it, which is basically broadband-connected PC desktop users—that was basically the market for Second Life. And the thing that was important about that market was: it was diverse, there was an equal number of men and women. It felt ubiquitous. It felt like you had the equipment if you needed it.”

Image courtesy High Fidelity, via YouTube

Standalone 6DOF headsets like Oculus Quest will likely see a boom of new VR users attracted by lower price points in the coming months, however he contends the sort of healthy userbase High Fidelity needs could be farther away than you may think. Rosedale estimates the market is three years behind his decidedly bullish expectations from the early days, before the first generation of VR headsets landed on consumer doorsteps.

“I would have enthusiastically said in 2013 that we would have had 10 or 20 million people making daily use of HMDs [by now], and we just don’t have that. We have close to two orders of magnitude less than that,” Rosedale says. “I just have to wait for that to happen before we can really deliver.”

Additionally, Rosedale maintains VR headsets still haven’t addressed the fundamental issues that drive users away from remaining in VR in the first place, including long-term headset comfort, clear text legibility on par with traditional monitors, and the ability to type & take notes while in VR. While the medium’s trajectory is undeniably headed in that direction, the times are simply too uncertain for the company to remain a consumer-first platform. The studio is looking to straddle that gap by appealing to remote workers with its desktop client, VR support, and more importantly the platform’s built-in positional audio.

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HiFi’s Enterprise Detour

The inflection point in all of this, Rosedale tells me, took place about a month ago when the company came up with the idea of providing High Fidelity as a work platform, something he maintains companies will use both in and outside of VR headsets as a part of a virtual office.

To test the hypothesis, the studio sent everyone home to work remotely. Within three days, Rosedale decided that the company would, in his words, “make it a big focus of our time.” To boot, the team continued working remotely through High Fidelity for a few weeks in a virtual campus to further test the company’s direction.

“The tipping point was seeing that we really felt committed to being able to go after this idea of work, and working together, and the sense of presence they can have working as a remote team,” Rosedale elucidates.

High Fidelity already provides a way for users to pop in and out of VR on the fly; as soon as you take off the headset, you snap to a monitor mode that allows you to look around via mouse and keyboard. Moving forward with this idea, Rosedale envisions users wearing headphones while going about their normal work tasks, although not actively engaging in the platform at all times as it runs in the background. With positional audio, users would be able to hear a colleague approach their AFK avatar and respond either by interacting through the desktop client, or by putting the on their VR headset for a more immersive view.

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Primarily relying on always-on positional audio is an interesting idea to say the least, and looks to fill the same role that Slack does for remote workers, albeit with the ability to hold the sort of frictionless conversations and meetings you might otherwise have in a typical office.

Critically, Rosedale doesn’t consider the move a pivot, but rather another end to the mean for creating virtual worlds that he estimates could touch “many millions of people.” By Rosedale’s reckoning, there are currently five million remote workers in the US, and that number is going up “very fast.”

As it is, High Fidelity has some serious skin in the game. As the most well-funded VR-compatible platform of its type—amassing more than $70 million in external funding since it was founded in 2013—it needs to find a way to get cash flow-positive while continuing its path towards realizing Rosedale’s dream of it becoming a major player in the burgeoning metaverse. The launch of the company’s stable cryptocurrency, HFC, and the associated digital marketplace simply hasn’t created the uplifting virtual economy for High Fidelity, or the sort of vibrant marketplace that Second Life massively benefited from in the early 2000’s. On that note, Second Life still boasts upwards of 50,000 peak users daily—something even VRChat (in all its virality) can’t profess.

Supposing many of High Fidelity’s contemporaries are facing the same harsh reality—either find a way to monetize, be acquired, or eventually close up shop—it’s clear we’re coming to an inflection point in VR’s history when many of the early free VR platforms will need to make a similar call. That said, it’s still early days, although the wait for VR mass adoption is essentially indeterminable at this point. We simply don’t know how all of this will unfold, which is exactly the reason why we still haven’t finished traveling on the road to VR.

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Well before the first modern XR products hit the market, Scott recognized the potential of the technology and set out to understand and document its growth. He has been professionally reporting on the space for nearly a decade as Editor at Road to VR, authoring more than 3,500 articles on the topic. Scott brings that seasoned insight to his reporting from major industry events across the globe.
  • kontis

    Second Life still boasts upwards of 50,000 peak users daily—something even VRChat (in all its virality) can’t profess.

    I think Second Life has its stats inflated by all the bots and alts people use.
    VRChat doesn’t have this problem, because there is no economy that encourages this kind of behaviour.

    • thatguy

      well the whole point of high fidelity and its partnership with a cryptocurrancy was to encourage an economy bigger than second life.

    • PK

      from the beginning rosedale had great ideas, but his team’s execution was lacking. same with others trying to get in this space, except for vrchat. for someone like me, who’s very enthusiastic about the potential of creating virtual spaces and hosting events, HF was tough to build for, it didn’t host content for me, and the IK for the characters made it feel cheap. they did some things really well but overall it was just way behind some others. altspace didn’t let me make anything myself, sansar did but i couldn’t import any models i attempted, also it felt designed by people that never got motion sickness themselves and weren’t willing to fix some basic issues, and maybe they finally did i don’t know. but vrc put in the work to allow people to use a great tool like unity, that was clearly the right approach and it wasn’t at all a surprise that they eventually blew up while others fell behind. because there’s a lot of creative people that wanted to create in vr and share our work, we just needed someone to give us these sorts of tools. my point is, while their intentions were good, too many of these companies aren’t willing to adapt pre-existing tools, like unity or unreal, that may limit them in ways but will give us a better user experience from the start. while still not limiting us so much that we have to settle exclusively for their curated avatars and environments. it’s obviously not an easy balance, still vrc figured it out over five years ago. they weren’t trying to add in commerce, it was all about letting us build worlds. and it’s been over four since they pulled ahead and only rec room and dreams currently have a shot of catching up, that i can see. although i am rooting for neos as well! and i wish they all used janus’s portal system.

  • Foreign Devil

    A shame. They had all the right intentions. . Kind of glad I didn’t invest time in building worlds for it. . . I guess I’m waiting to see where the chips fall before investing time in world building.

    • sfmike

      Same here as I too have been trying to decide which platform will survive before spending my precious time building on a platform that fails. VR users are still a tiny segment and until that changes, if ever, this will be a problem. It’s too bad because the mass Bingo sessions in High Fidelity were a lot of fun and the tech was working well. Now I’ve lost any interest in going there.

    • WyrdestGeek

      I don’t want to count High Fidelity out just yet.

      I mean — Yes, they’re effectively out *for now*. But I think their plan is just to stay alive long enough to still be there whenever mainstream VR does actually take off.

      They seem much more pragmatic about it than some other companies.

  • WyrdestGeek

    It really sucks that they had to lay off 20ish workers, but it’s cool to see the company finding ways to stay alive, and adapt to reality rather than just continuing to promise infinite Blue Sky (*cough* Magic Leap).

  • They’re pivoting… I hope that this will help the company in sustaining itself and keeping the metaverse dream alive!